Minimum Wage Executive Order A Win for 500,000 Workers

January 29, 2014

Derek Pugh

The federal government funds more low-wage jobs than Wal-Mart and McDonalds combined. Thanks to President Obama’s announcement this week that he will sign a ‘good jobs’ executive order, this will change.

“We consider this a win,” said Rep. Raul Grijalva, D-Ariz., on Wednesday during the Progressive Congressional Caucus’s response to the president’s State of the Union address. Grijalva was joined by Rep. Keith Ellison, D-Minn., and several low-wage employees of federal contractors.

As income inequality becomes a central theme for the midterm elections, congressional Democrats are continuing to push a proposal that would raise the federal minimum wage from $7.25 an hour to $10.10 by 2015. But since House Speaker John Boehner is not willing to allow that to happen, President Obama acted to the extent he could on his own.

According to a White House fact sheet, the new executive order will raise the wages of “workers who are performing services or constructing buildings and are getting paid less than $10.10 an hour.” The current federal minimum wage stands at a mere $7.25 per hour. Although it will take effect only for new contracts signed after the effective date of the order, from this point forward taxpayer dollars won’t contribute to fostering inequality.

An increase in the minimum wage to $10.10 per hour – which is long overdue already – would raise the wages of 27.8 million workers. This would put about $35 billion in the pockets of workers who would spend more, increasing gross domestic product by almost $22 billion and creating roughly 85,000 new jobs.

Americans and economist agree that raising the minimum wage is morally right and economically advantageous. A recent poll found that 80 percent of people support increasing the minimum wage and indexing it to inflation, including 58 percent who strongly support. Just this week, 75 leading economists—including Joseph Stiglitz, Peter Diamond, and five other Nobel Laureates—wrote a letter to congressional leaders and President Obama urging them to support such a proposal.

“At a time when persistent high unemployment is putting enormous downward pressure on wages, such a minimum-wage increase would provide a much-needed boost to the earnings of low-wage workers,” the group wrote.

With such a broad base of support from the public and professionals alike, raising the minimum wage should be politically feasible. But Republicans in Congress are intent on keeping the wages of millions of workers down so corporations can add an extra billion or two to their profit margin.

Last March House Republicans voted unanimously against raising the federal minimum wage to $10.10 a hour. Their vote symbolized the party’s unity in protecting the top 1 percent of our society while ignoring the majority of Americans.

Tuesday night President Obama showed he is committed to raising the wages of workers by using his executive authority to the extent possible.

This victory is a testament to workers who took the risk and went on strike again and again for higher wages. After six long years of anemic growth and stagnant wages, Americans are tired of living in a rigged post-recession economy. And with little action from Congress, people across America are beginning to act through local and state ballot measures. Just this month, the minimum wage rose in 13 states and four cities.

“This announcement is a direct result of these workers,” Ellison said. “It’s evident that progressive action, taken on your own behalf, for yourself and your fellow workers, will benefit you and your family.”

“Obama is on our side. He has listened to our needs. He’s not on Ronald McDonald’s side,” said Alexis Vasquez, one of the employees working in the Reagan Building for a federal contractor. “We will have a better life because of him [Obama].”

Using an executive order to improve the wages of almost a million American workers was a decisive way to go. Obama has vowed that, in the face of partisan obstruction, “whatever executive authority I have to help the middle class, I’ll use it.”

The president needs to remain bold, unapologetic and push for a progressive populist economic agenda.

The Senate is scheduled to vote Wednesday on a bill that would allow 40 million Americans to lower their student loan debt. Use our calling tool to let your senator know that you stand with them.

About Derek Pugh

Derek Pugh is a special assistant at the Campaign for America’s Future. His work focuses on a range of issues affecting economic growth and income inequality, including youth participation in the economy, the middle class, green energy, manufacturing, and postsecondary education. Before joining the Campaign for America’s Future, Derek worked as a Roosevelt Policy Fellow at Young Invincibles, where he focused on provisions of the Affordable Care Act and student-loan debt. Prior to his fellowship, he provided research on African American infant mortality as a McNair Scholar for the Lifecourse Initiative for Healthy Families. Mr. Pugh is from Cincinnati, Ohio, where he served as an AmeriCorps VISTA volunteer. He has also lived in Asia and Europe. Derek holds a bachelor’s degree in health and society with a focus on community health and policy from Beloit College, and a professional certificate in public policy from American University.